The automakers see the demand revival in China as a silver ray of hope. The coronavirus outbreak could help in demand surge for private cars, as consumers are considering them as a safer option compared to public transport or ride-hailing.

ETAuto

April 10, 2020, 14:29 IST

This revival in auto sales in the Chinese city could be the ray of hope for the major automakers across the world.New Delhi: While the rest of the world is seeing a never before experienced industrial lockdown, China is slowly regaining its pace. The auto industry is no difference there. While the automakers across the world have been forced to shut their plants for an indefinite period due to the outbreak of the coronavirus, in China, the auto sector is coming back to life again.

Wuhan, the epicentre of the COVID-19 outbreak that is threatening the world today with more than 15 lakh people infected and nearly 1 lakh death, is slowly recovering when it comes to car sales, as claimed by a Bloomberg report. The auto dealerships there are seeing customers returning.

As the Bloomberg report says, vehicle sales in Wuhan have been increasing since early February 2020, however, from a near-zero level. The report quotes some dealerships in Wuhan who claimed that daily sales have rebounded to pre-coronavirus crisis levels.

This revival in auto sales in the Chinese city could be the ray of hope for the major automakers across the world. The carmakers like Volkswagen, General Motors, BMW, Toyota have been experiencing sales slump across the world due to the COVID-19 virus outbreak, initially due to the supply chain disruption and then the plant shutdowns. The demand recovery in the Chinese market, which plays a key role in any major automaker's global growth, suggests that customers are willing to buy discretionary goods.

Commenting on this sales revival, Pieter Nota, member of the Board of Management of BMW AG, said, “We are reacting to the globally challenging sales situation caused by the corona pandemic and are flexibly adapting our production volume to demand. In China, we are seeing the first signs of recovery with a strong order intake.”

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A study conducted in February 2020, by research firm Ipsos, shows that willingness to buy private cars in China has increased to 66 percent after the coronavirus crisis, as compared to 34 percent people using private vehicles before the COVID-19 outbreak. This sentiment of considering private vehicles safer than public transport is helping in the growth of car sales in the country.

The media report also claims that weekly retail car sales in China have been improving for nearly a month, after declining around 96 percent during the coronavirus crisis. In each of the first three weeks of March 2020, sales decline moderated to 50 percent, 44 percent and 40 percent respectively, as revealed by China Passenger Car Association. It also predicted that weekly sales will rebound to the same level as 2019's by the end of this month.

As China Automobiles Dealers Association has claimed, around 99 percent of China's auto showrooms resumed operations in the first week of April, with consumer footfalls at the outlets rebounding to around 66 percent of the normal level.

What's the scenario in India?

In India, the auto industry has been hit hard by the coronavirus outbreak, initially due to the supply chain disruption and later by the 21-day lockdown imposed by the government in a bid to contain the outbreak of COVID-19. With the current situation, the lockdown could be extended further, adding more salt to injury, which means no immediate recovery is there.

As Rajan Wadhera, President of Society of Automobile Manufacturers (SIAM) said in a statement, the plant closure of auto OEMs and component makers in India will lead to a loss or more than Rs 2,300 crore every day.

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